Is the clean energy stagnation finally over?

Fossil fuels have generated roughly two-thirds of the world’s electricity for the past three and a half decades.

Despite the expansion of nuclear power in the 1980s and recent year-after-year of “historic” growth in renewable energy, increasing supplies of low-carbon electricity have barely kept pace with the growth in global demand for electricity. As a result, the share of the global electricity mix provided by coal, gas, and oil has been remarkably constant over that time.

Fossil fuels provided about 70 percent of global electricity in 1980, 62 percent in 1990, 64 percent in 2000 and 65 percent in 2010.

In 2013, Roger Pielke Jr., a professor of political science at the University of Colorado and author ofThe Climate Fix, dubbed this lack of progress towards a lower-carbon electricity mix “the Clean Energy Stagnation.”

But has the great Clean Energy Stagnation finally come to an end?

Renewable energy now growing at 100 gigawatts per year

The world added 103 gigawatts (GW) of renewable power capacity in 2014, according to a new report from the UN Environment Program (UNEP) and Bloomberg New Energy Finance (BNEF). That figure excludes large hydropower projects (but includes small hydro less than 50 megawatts in capacity) and is dominated by wind and solar, which saw growth of 49 GW and 46GW, respectively, both record-setting figures.

More importantly, the share of renewable electricity (excluding large hydropower) in the global electricity mix ticked upwards from 8.5 percent in 2013 to 9.1 percent in 2014.

The combined share of wind, solar, biomass and waste-to-power, geothermal, small hydro and marine power is now nearly on par with the 10.5 percent of global electricity supplied by nuclear power.

The growth of renewables was enough to push fossil energy’s share of the mix down by 1.2 percentage points, according to data compiled by Jessica Lovering, a senior energy analyst at the Breakthrough Institute, from International Energy Agency (IEA) and UNEP/BNEF reports. That follows a 2 percent decline in fossil energy’s share from 2012 to 2013.

Is this a sign that renewable energy is finally growing fast enough to not only help meet growing global demand but also push down fossil fuels’ market share?

Perhaps.

Two years is a short trend. For renewables to truly compete with fossil fuels in a fight for global market share, wind, solar, biomass and other renewable energy sources will have to continue to expand at least 2.3 percent per year. That’s the compound annual rate of growth in global electricity demand forecast by the IEA’s latest central scenario (which, I might add, already bakes in some pretty ambitious energy efficiency goals).

To drive actual consumption of fossil fuels (and not just fossil electricity’s share of a growing global market) downwards, renewables would need to increase their annual output (in terawatt-hours) faster than the demand for electricity is growing.

How fast will renewable energy grow?

Getting into the prognostication game is a dangerous business of course. Instead of making my best guess forecast for renewable energy growth, I’ll instead give you two forecasts that are almost certainly wrong—but serve to bracket the realm of most likely outcomes.

Consider two future scenarios for global electricity supplies out to the year 2040.

In one future, renewable energy sources excluding large hydro continue to grow in absolute terms at the roughly 100 GW (or 183 terawatt-hours) per year rate achieved in 2014. This would imply linear growth in renewable energy capacity, and would mean that renewables would continue with strong percentage annual growth for the next few years, but see the growth rate decline over time.

In another future, global non-hydro renewable electricity generation continues expanding at a compound annual growth rate of nearly 10 percent per year. That would imply a doubling of generation roughly every 7 years.

In both scenarios, I’ll assume global electricity demand grows 80 percent by 2040, as per the IEA’s latest core scenario. And I use hydropower and nuclear power expansion forecasts from the IEA as well (hydro expands 35 percent and nuclear capacity grows 60 percent globally through 2040, after replacing retiring existing plants).

As I said, both of these scenarios are likely to be completely inaccurate forecasts. In reality, emerging technologies tend to follow an S-curve of adoption, starting out at rapid compound annual growth rates, leading to descritions of the “meteoric” or “exponential” rise of this or that technology. But these rates eventually slow as the industry reaches maturity, then begin to look more like linear growth with steadily declining relative growth rates. (Indeed, the IEA assumes fairly linear growth for hydropower and nuclear, which I adopt here for these scenarios).

S-curve Adoption Rates for Consumer Products in the United States, 1900-2005

Image source: New York Times.

It’s unlikely the global renewable energy industry will stop growing in scale and stay stuck at the 100 GW per year level for the foreseeable future.

Then again, you just can’t keep up exponential growth forever.

100 GW of new non-hydro renewables was enough to increase annual generation from these sources by nearly 10 percent in 2014, but it would take 286 GW—or almost 3 times as much annual installed capacity—to sustain a 10 percent growth rate if the industry keeps expanding at a 10 percent rate through 2025.

Indeed, the percent annual growth rate for non-hydro renewables has already declined from a peak of 19 percent in 2011 to 10 percent in 2014.

So these two scenarios are both wrong—but useful nonetheless. It’s likely that reality will fall somewhere in between these two cases, with annual percent growth rates slowly falling each year, but with growth in absolute terms expanding for quite a while longer at least.

Has the great Clean Energy Stagnation come to an end?

Where does that leave us then? Is the great Clean Energy Stagnation over? And can renewables grow fast enough to reduce fossil energy generation in absolute terms (i.e. in terawatt-hours), not just in percentage terms?

As these two scenarios illustrate, it all depends on how much longer the renewable energy industry can continue to expand at rapid compound annual growth rates.

If renewable capacity grows linearly, that won’t be fast enough to drive fossil energy out of the global energy mix, as illustrated by Scenario 1 above. Renewables will keep fossil energy’s share of the global electricity market from expanding much in this scenario, but as global demand is growing as well, fossil fueled electricity generation will continue to increase in absolute terms.

Only if renewables can continue to grow much faster than energy demand over the next two decades and beyond, as in Scenario 2, will they truly displace fossil fuels in the world’s electricity supply—in both market share and absolute terms.

Now I’ll hazard to present my best guess: renewables will follow a typical S-curve of adoption, continuing to experience strong compound annual growth over the next decade, but with a steadily declining rate of growth. Just as we’ve seen the compound annual growth rate decline from 19 percent to 10 percent from 2011 to 2014, this rate will continue to decline over the next decade or so.

The bad news here is that as soon as the growth rate for renewables declines below the rate of electricity demand growth, the market share of wind, solar, and other renewable sources in the global electricity supply will begin to stagnate and decline. And long before that point, total consumption of fossil fuels for electricity generation will begin to climb once again.

This is exactly what happened after nuclear energy’s initial expansion began to slow. Nuclear’s share grew from 8.5 percent in 1980 to a peak of 17.5 percent of global electricity by 1995, helping drive fossil energy’s share down from 69.4 percent to 60.5 percent over that period. Then as nuclear construction stalled out, and more recently as plants in Germany, Japan, and elsewhere were idled, nuclear’s share fell to 12 percent in 2011 and 10.5 percent by 2014.

Meanwhile, fossil-fueled electricity generation grew more than 150 percent from 1980 to 2014.

Indeed, the stall-out in nuclear’s growth was one of the principal causes behind the ‘Clean Energy Stagnation’ of the last three decades.

Can renewable energy continue to grow exponentially?

Clearly the reasons behind the slow down in nuclear construction differ from the potential challenges facing the renewable energy industry. But renewable energy faces its own challenges to continual exponential growth.

One is the simple mathematics of compounding growth: as explained above, it will take far more effort to sustain 10 percent growth a decade from now than it does today.

Yet there are several other challenges ahead for rapid renewable energy growth:

• The declining marginal value of renewables as they approach a market share equal to their capacity factor;
• Land use impacts of renewable sources, and resulting NIMBYism;
• The need to continually replace aging capacity;
• The need for transmission network expansion to tap into and aggregate geographically disperse renewables; and
• The increasing challenges of integrating variable renewables at larger market shares.

Technical innovations and public policy measures can help push back or mute the impact of these challenges, but not without cost and only given sufficient political will.

How to permanently end the great Clean Energy Stagnation

The global growth of renewable energy is a remarkable success. We have now entered an era where renewable energy sources are expanding fast enough to register on the global level, shrinking fossil energy’s market share. That’s a huge deal.

Yet banking on the renewable energy sector sustaining exponential growth over several decades is probably a foolhardy wager. It would defy everything we know about technology diffusion, in the energy sector and otherwise.

If the compound rate of renewables growth slows, as it most likely will, what will pick up the slack?

The best way to ensure the share of global electricity from low-carbon sources continues to expand—and more importantly, fossil generation declines in absolute terms—is to scale up a diverse portfolio of low-carbon sources, each as rapidly as possible.

That means not putting all our eggs in the renewables basket.

It means getting nuclear energy growing again globally—a tough challenge when virtually the entire existing fleet of reactors will retire between now and 2040 as well.

Finally, it means developing lower-cost, scalable carbon capture and sequestration (CCS) options, especially systems that can be retrofit onto existing coal plants, which are being built in droves across the emerging economies. That’s a serious technical challenge, but one that needs an equally serious effort. Even if renewables (and nuclear) scale rapidly, the world will have to deal with a substantial installed base of relatively young coal plants across China, India, and elsewhere.

In short, permanently ending the Clean Energy Stagnation and driving fossil fuels out of the global electricity mix will ultimately require everything we’ve got: renewables, nuclear, and even CCS.

This article is published in collaboration with The Energy Collective. Publication does not imply endorsement of views by the World Economic Forum.

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Author: Jesse Jenkins is a researcher, analyst, and writer with expertise in energy and climate change, electric power systems, energy policy, and innovation policy. He is currently a Digital Strategy Consultant and Featured Columnist at TheEnergyCollective.com.

Image: A rainbow hangs over electricity-producing wind turbines near the Spanish Basque town of Durango. REUTERS/Vincent West.